A pilot-scale continuous-flow no-mix reactor of 25 L capacity was designed to act as a liquid-solid separator in order to maximize the generation and retention of biomass. The system was used to study the effects of operating temperature, solid content, and hydraulic retention time on the biogas yield and pollution potential reduction of dairy manure. The system has a higher biogas production rate than other systems reported in the literature operating under similar conditions. Reductions of up to 58.15, 55.90, and 48.43% in the solids, chemical oxygen demand, and nitrogen concentrations were achieved in the effluent. The sludge obtained from the system had high nitrogen and ash concentrations and can be used as a fertilizer concentrate or as a protein supplement in animal feeding.